OVERVIEW OF THE

NEW GOVERNMENT
ACCOUNTING SYSTEM
(NGAS)
 WHY THE NGAS ?
1. Simplify government accounting

2. Conform to international accounting

standard

3. Generate periodic and relevant financial

reports for better monitoring of
performance
Fund – The accounting Unit for
Governmental Entities
A fund is a sum of money or other
resources set aside for the purpose of
carrying out specific activities or attaining
certain objectives in accordance with a
special regulations, restrictions or
limitations.
Two types of funds…
o General Fund
o Specific Fund/Special Purpose
 Budgetary Procedures
1. Preparation and Presentation
 Units prepare budgets after DMB issues Budget
Call and submits to DBM for review and
consolidation.
2. Budget Legislation and Authorization
 Made by Congress through General
Appropriations Bill, once approved it becomes
the General Appropriations Act to be signed by
the President into a Law.
3. Budget Execution or Operation
4. Budget Accountability
DEFINITION
Government Accounting (Sec. 109, PD 1445)
“encompasses the processes of analyzing,
recording, classifying, summarizing and
communicating all transactions involving the
receipt and disposition of government fund
and property and interpreting the result
thereof ”
1. To produce information concerning the past
operations and present condition;
2. To provide a basis for guidance for future
operations;
3. To provide control of the acts of the public
bodies and officers in the receipt, disposition
and utilization of funds and property; and
4. To report on the financial position and results of
the operation of government agencies for the
information of all persons concerned
OLD (GAS) AND NEW
GOVERNMENT
ACCOUNTING SYSTEM
(NGAS)
 FEATURES OLD NEW
Basis of Cash Accrual – IRA
Recording Income Modified Accrual–
RPT
Cash Basis – ET
AL
Expenses Accrual Accrual with
exceptions
Allowances
Bad Debts No Provision Provides
Depreciation No Provision Provides
Account Code 6 Digit 3 Digit
Structure
Inventory System Outright Expense Perpetual
Inventory System
 REPORTS OLD NEW

Trial Balance 4 Column 2 Column

Income Statement X /

Statement of / X
Operation
Balance Sheet / /

Cash Flow X /

Analysis of Cash / X
Account
THE NEW GAS AND
COMMERCIAL
ACCOUNTING (CA)
 NGAS same as CA except for:
Salient Features of Government
Accounting
1. The requirement for appropriation,
allotment and obligation for every
expenditure (the obligation accounting
system)
2. Public Infrastructure separate from Plant,
Property and Equipment
3. Use of Special Accounts
 REPEALING CLAUSE

The Manual on the New Government

Accounting System replaces the
Government Accounting and Auditing
Manual (GAAM), Volume II, prescribed
under COA Circular No. 91-368, dated
December 19, 1991.
 LEGAL BASIS

On October 30, 2001, based on the

authority granted under Sec. 2 (2), Art. IX-
D of the 1987 Constitution, COA Circular
No. 2001-005 prescribed the use by local
government units of the New Government
Accounting System (NGAS) effective
January 1, 2002 which provide that:
“The Commission on Audit shall have
exclusive authority, subject to the
limitations in this Article, to define the
scope of its audit examination, establish
the techniques and methods required
therefore and promulgate accounting and
auditing rules and regulation, including
those for the prevention and disallowance
of irregular, unnecessary, excessive,
extravagant, or unconscionable
expenditures, or uses of government funds
and properties”.
BASIC FEATURES AND POLICIES OF
NGAS
Accrual Accounting – A modified accrual
basis of accounting is used, wherein, all
Expenses and Income (except where
accrual basis is impractical) shall be
recognized when incurred.
One –Fund Concept – As required under
Sections 308, 309 and 310 of the Local
Government Code, separate books shall
be maintained for the General Fund,
Special Education Fund and Trust Fund.
 Books of Accounts (Regular Agency
Books) Used by LGU and GOCC for their own
operations and receipts of subsidy from national
Government.
*Journals – Cash Receipts Journal
Cash Disbursements Journal
Check Disbursements Journal
General Journal
Ledgers – General Ledger
Subsidiary Ledger
* With the e-NGAS, only General Journal is
used.
National Government Books
 used to record income the agencies are not
authorized to use and are required to be
remitted to the National Treasury. Consists of:
 Cash Journal
 General Journal
 General Ledger
 Subsidiary Ledger
 SUBSIDIARY LEDGER ACCOUNT

SUBSIDIARY LEDGER

GENERAL LEDGER Province of Bulacan

ACCOUNT GL Account Title : Performance/Bidders/Bail Bonds Payable GL Account Code : 427

Name of Creditor: EFG Merchandising SL Code:
Contact Person: Jo Castro Position: Store Manager Telephone No.: 927-33-46
150 ABC Bldg., EDSA , Q.C.
GENERAL LEDGER
Amount
Province of Bulacan Date Particulars Ref.
Debit Credit Balance

2003
Account Title: Performance/Bidders/Bail Bonds Payable Account Code: 427
Jan. 31 Bidder's bond for the purchase of office supplies

with estimated cost of P160,000 RCD No. 2003-01-001 7,500 7,500

Amount June 30 Refund of bidders' bond RCI No. 2003-06-025 7,500 -
Date Particulars Ref.
Debit Credit Balance

2003
Jan. 31 Receipt of Bidders Bond CRJ 7,500 7,500
Feb. 28 Receipt of Performance Bond CRJ 100,000 107,500
June 30 Refund of Bidders Bond CkDJ 7,500 100,000
SUBSIDIARY LEDGER
Agency

GL Account Title : Performance/Bidders/Bail Bonds Payable GL Account Code : 427

Name of Creditor: E.C. Cruz Construction SL Code:
Contact Person: Alex M. Lopez Position: Manager Telephone No.: 931-2991
RDC Bldg. Sta. Cruz, Manila
AO 5-14-02 Amount
Date Particulars Ref.
Debit Credit Balance

2003

Feb. 28 Bond for the construction of slaughter house

with total contract price of P1 million RCD No. 2003-01-002 100,000 100,000
Chart of Accounts and Account Codes
– A three- digit account numbering system
is adopted.
 Chart of Accounts and Account
Codes, continued…
The coding structure now identifies
responsibility centers.
Rationale
The Chart of Accounts is prescribed for
use by all sectors of the government. The
descriptions of all the accounts and the
instructions as to when these are to be
debited and credited are provided to
achieve uniformity in the recording of
government financial transactions.
Financial Statements – the following
statements is prepared monthly, quarterly
and annually.
– Balance Sheet – shows the financial condition of the
Agency at a specific date.
– Statement of Income and Expenses – shows
the income and expenses of the agency at the end of a
particular period.
– Statement of Cash Flows – shows the agency’s
cash activities.
– Statement of Government Equity – similar to
statement of equity

* Notes to Financial Statement shall accompany year-end

reports.
Trial Balance – The two money- column
trial balance is used.
Appropriations, Allotments and
Obligations - Journal Entry shall no
longer be prepared to record the
appropriations, receipt of allotments and
incurrence of obligations. In lieu of this,
separate registries shall be maintained by
the Budget Office to control the
appropriations, allotments and obligations
for each classes of expenditures, namely:
1. Registry of Appropriations, Allotments, and
Obligations – Capital Outlay ( RAAOCO)
2. Registry of Appropriations, Allotments, and
Obligations – Maintenance and Other Operating
Expenses (RAAOMO)
3. Registry of Appropriations, Allotments, and
Obligations – Personal Services (RAAOPS)
4. Registry of Appropriations,
Allotments, and Obligations -
Financial Expenses (RAAOFE)
Bank charges, interest expenses, and
other related expenses shall be
separately classified from Maintenance
and Other Operating Expenses
Maintenance of Supplies and PPE
Ledger Cards.
Construction of Assets

• Liability shall be recognized as bills

are received based on percentage
of completion and /or contract.
• Construction period theory is
applied for costing purposes
Registry for Public Infrastructures (PI)

• PI such as roads, bridges, plazas,

parks should be maintained in a
separate Registry for Public
Infrastructures (RPI)
• Monitoring of completed public infrastructures
/ reforestation projects via the Registry of
Public Infrastructures / Registry of
Reforestation Projects.
Depreciation
• The straight line method of depreciation
shall be used with 10% SV.
• Depreciation expense shall start on the
second month after the
purchase/completion of the PPE
• Serviceable assets no longer used,
obsolete and unserviceable assets
awaiting disposal shall be reclassified to
“Other Asset” account.
Recognition of Liability

• Recognized at the time goods and

services are accepted or rendered
and supplier / creditor bills are
received
Corollary /Negative Journal Entries

• No longer be used
• Acquisition of fixed/other assets be
recognized as capital expenditures
• Corrections of errors shall be by
reversing or adjusting entries, all in
the positive amount
Others
 Allowance for doubtful accounts is provided.
 Contingent accounts shall no longer be used
 Interest income and expense shall be
accrued in normal manner.
 Petty Cash Fund shall be maintained in
Imprest System
 Cash deposits and foreign loans shall be
computed using the FX rate prescribed by
BSP. Any Forex Gain/Loss shall be
recognized, Forex loss being classified under
Financial Expenses.
 SOURCE

NGAS Manual For Local Government

Units Vol. 1 – The Accounting Policies
NGAS For Local Government Units
(Participant’s Notes)
Davao City’s Accountant NGAS Report